You may have heard about the potential for a pending stock market crash.
Here’s hoping that doesn’t happen. In the meantime, NFTs may have beat Dow Jones to the punch. Yes, there’s an NFT market crash going on, and it has people asking: Are NFTs dead?
For the uninformed, NFTs (non-fungible tokens) represent digital ownership that is embedded in blockchain, or cryptocurrency financial services. In April, predictions that it would grow 147.24 billion from 2021 to 2026 made headlines.
That hasn’t quite panned out.
NFT trading volumes have tumbled 97% from their peak in January, a Bloomberg headline declared. But it wasn’t just a negative headline. As the article reported, the volumes have gone from $17 billion in January to $466 million in September. A Reuters report shared that NFT sales are down 60% from Q2 to Q3. The average NFT sale also collapsed from $3,894 in May to $293 in July — a 92% decline— according to one analysis.
What’s the problem with the once-booming and promising marketplace? Like so many things in life right now, inflation is playing a role in the NFT market crash.
Word of the bad news likely isn’t surprising to market watchers. In late September, the Federal Research raised federal funds to a 3% to 3.25% target rate, its fifth hike this year, in response to the continued inflation crisis. A Time report predicted a rollercoaster to come for bitcoin, which dipped below $19,000, its lowest since June, after the Fed made its announcement. After similar announcements in March, May, and June, bitcoin’s price fell by 10% or more. It also dropped after the July hike. It was just less severe.
Like the stock market, crypto is a risky asset. When the Federal Rate increases, it can negatively affect the NFT marketplace. It’s unclear if and when the crash will end when inflation does — there’s no timetable on that either. For now, the market is volatile.
So, are NFTs dead and buried? It’s not time to officially declare them over, but you probably don’t want to bet anything important on the NFT marketplace right now.
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